Shell seeks five more years for Arctic oil-drilling drive

WASHINGTON — Shell is asking the Obama administration for an extra five years to hunt for oil in Arctic waters near Alaska, saying legal disputes, seasonal drilling restrictions and other challenges justify the additional time.

Without the extension, Shell’s oil and gas leases in the Chukchi and Beaufort seas will begin expiring in 2017.

“Prudent exploration is now severely challenged prior to the current lease expiration dates . . . due to the repeated erected barriers to exploratory activities, the already severe disruption to Shell’s exploratory efforts, limited rig availability, brief operating windows and the unusually long lead times required to mobilize activities in Alaska,” Shell executive Peter Slaiby said in a letter requesting the extension.

“Despite Shell’s best efforts and demonstrated diligence, circumstances beyond Shell’s control have prevented — and are continuing to prevent — Shell from completing even the first exploration well,” added Slaiby, vice president of Shell Alaska.

In the Gulf of Mexico, the Bureau of Safety and Environmental Enforcement regularly approves “suspension of operation” requests, which effectively pause that 10-year deadline for developing a lease and moving toward actual oil and gas production — not just initial exploration. But companies must prove they are making significant progress toward development.

Safety bureau spokesman Nicholas Pardi said the agency was considering Shell’s request. “BSEE evaluates suspension requests on a case-by-case basis and seeks to use its authority to ensure safe, diligent and environmentally responsible exploration, development and production of offshore resources.” he added.

Oceana’s deputy vice president for the Pacific, Susan Murray, said regulators should deny Shell’s request.

“Shell spent billions of dollars fully aware of the risks to that investment, and the government should not bend the rules to allow the company to continue business as usual,” Murray said. “Shell deserves no special treatment, and, to the contrary, has a track record of irresponsible choices that warrants close scrutiny and the highest standards.”

Murray called Shell’s rationale for an extension “incomplete and, at best, disingenuous.”

Shell cited a number of challenges that have curtailed its drilling time, including court delays tied to environmentalists’ challenge of the 2008 sale of leases in the Chukchi Sea. The Bureau of Ocean Energy Management is redoing the environmental analysis that underpinned that sale now, in response to a court order invalidating it.

The Interior Department granted some suspensions in response to the legal delays, including a federal court ruling in August 2007 that halted drilling.

Even without a legal cloud, Shell’s Slaiby noted that exploratory drilling in the Arctic is limited to just a few ice-free months each year, giving it a small window to act. Environmentalists have urged the Obama administration to include seasonal restrictions in new Arctic oil and gas standards set to be proposed later this year.

Problems getting air permits for drilling rigs and support vessels was another complication.

Shell also said a limited number of Arctic-viable drilling rigs and support vessels have been a constraint, noting that “multi-year lead times are required to both modify existing non-Arctic assets where possible or to construct new assets,” for which the costs may not be recouped.

Although Slaiby noted the logistical challenges of searching for oil in the remote Arctic, he made no specific mention of the 2012 mistakes, including Shell’s delays in getting a one-of-a-kind, purpose-built emergency containment system certified and then transport it near planned wells. Although that equipment was ultimately deemed acceptable, it was damaged during testing and was not able to make it to the Arctic in time.

Finally, the company cites the uncertainty posed by forthcoming Arctic drilling standards as another limitation. Both Shell and ConocoPhillips have lobbied the Obama administration for flexibility.

Other companies with Arctic drilling leases are in a similar predicament — facing deadlines for development — including ConocoPhillips and Statoil. Both firms have paused their own Arctic exploration, giving them a chance to see how drilling standards evolve and watch how Shell navigates new and existing regulatory requirements.

Photo: Houston Chronicle

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Pete Slaiby, then-vice president of Shell Alaska, surveys the scene on the drillship Noble Discoverer before leaving the vessel on Oct. 9, 2012. As Shell's top executive in Alaska, Slaiby is overseeing the company's new venture in the Chukchi and Beaufort Seas. (Photo: Jennifer A. Dlouhy / The Houston Chronicle) less

Pete Slaiby, then-vice president of Shell Alaska, surveys the scene on the drillship Noble Discoverer before leaving the vessel on Oct. 9, 2012. As Shell's top executive in Alaska, Slaiby is overseeing the ... more

Photo: Houston Chronicle

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Workers step off a helicopter onto the Noble Discoverer during a crew change Oct. 9, 2012. Most Shell employees and some contractors on the vessel generally work three week shifts -- with three-week breaks in between the stints. (Photo: Jennifer A. Dlouhy / The Houston Chronicle) less

Workers step off a helicopter onto the Noble Discoverer during a crew change Oct. 9, 2012. Most Shell employees and some contractors on the vessel generally work three week shifts -- with three-week breaks in ... more

Photo: Houston Chronicle

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A view of the 160-foot-tall derrick on the Noble Discoverer. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

A view of the 160-foot-tall derrick on the Noble Discoverer. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: Houston Chronicle

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Onboard the Noble Discoverer, workers on the rig floor link up drill pipe. Shell is using the ship and its crew to finish the first half of a well in its Burger prospect in the Chukchi Sea -- with a plan to return next year and drill it to completion. (Photo: Jennifer A. Dlouhy / The Houston Chronicle) less

Onboard the Noble Discoverer, workers on the rig floor link up drill pipe. Shell is using the ship and its crew to finish the first half of a well in its Burger prospect in the Chukchi Sea -- with a plan to ... more

Photo: Houston Chronicle

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Kendall Duncan, then-assistant rig manager, and driller Sheldon Smith coordinate operations inside the drill shack on the Noble Discoverer. Duncan, who is from Poplarville, Miss., says he is still adjusting to the Arctic climate -- including the patches of ice that appear on the vessel. "It's like waking up in the Twilight Zone," Duncan says. (Photo: Jennifer A. Dlouhy / The Houston Chronicle) less

Kendall Duncan, then-assistant rig manager, and driller Sheldon Smith coordinate operations inside the drill shack on the Noble Discoverer. Duncan, who is from Poplarville, Miss., says he is still adjusting to ... more

Photo: Houston Chronicle

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Casing sits on the Noble Discoverer, ready to be run in the first half of the well Shell is drilling in the Chukchi Sea. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Casing sits on the Noble Discoverer, ready to be run in the first half of the well Shell is drilling in the Chukchi Sea. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: Houston Chronicle

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Casing sits on the Noble Discoverer, ready to be run in the first half of the well Shell is drilling in the Chukchi Sea. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Casing sits on the Noble Discoverer, ready to be run in the first half of the well Shell is drilling in the Chukchi Sea. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: Houston Chronicle

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The blowout preventer on the Noble Discoverer drillship has two sets of shearing rams meant to cut through drill pipe in case of an emergency.

The blowout preventer on the Noble Discoverer drillship has two sets of shearing rams meant to cut through drill pipe in case of an emergency.

Photo: Houston Chronicle

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Shown here is one of the two cranes on the drillship Noble Discoverer, which Shell is using to search for oil in the Chukchi Sea north of Alaska. The cranes can't be used once the temperature dips below 0 degrees celsius -- a challenge in this chilly, Arctic environment. (Photo: Jennifer A. Dlouhy / The Houston Chronicle) less

Shown here is one of the two cranes on the drillship Noble Discoverer, which Shell is using to search for oil in the Chukchi Sea north of Alaska. The cranes can't be used once the temperature dips below 0 ... more

Photo: Houston Chronicle

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The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: Houston Chronicle

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The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: Houston Chronicle

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Inflatable boom stretches between two oil spill response vehicles in Valdez waters during a Shell training exercise. When not at work, these two oil spill response vessels -- and a third -- will be housed on the Nanuq. (Jennifer A. Dlouhy / The Houston Chronicle) less

Inflatable boom stretches between two oil spill response vehicles in Valdez waters during a Shell training exercise. When not at work, these two oil spill response vessels -- and a third -- will be housed on ... more

Workers on board the Nanuq unroll inflatable boom and fill it before casting it off into Valdez waters during oil spill response training for Shell. (Jennifer A. Dlouhy / The Houston Chronicle)

Workers on board the Nanuq unroll inflatable boom and fill it before casting it off into Valdez waters during oil spill response training for Shell. (Jennifer A. Dlouhy / The Houston Chronicle)

Photo: The Houston Chronicle

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Priscilla Ridley holds a rope before equipment is hoisted on Shell's Nanuq oil recovery and supply vessel, during oil spill response training in Valdez, Alaska. The Chugagh Mountains are in the background. (Jennifer A. Dlouhy / The Houston Chronicle) less

Priscilla Ridley holds a rope before equipment is hoisted on Shell's Nanuq oil recovery and supply vessel, during oil spill response training in Valdez, Alaska. The Chugagh Mountains are in the background. ... more

Photo: The Houston Chronicle

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On the Nanuq, workers unroll inflatable boom and fill it before casting it off into Valdez waters during oil spill response training for Shell. The boom trailing behind the Nanuq is connected to an oil spill response vessel. (Jennifer A. Dlouhy / The Houston Chronicle) less

On the Nanuq, workers unroll inflatable boom and fill it before casting it off into Valdez waters during oil spill response training for Shell. The boom trailing behind the Nanuq is connected to an oil spill ... more

Photo: The Houston Chronicle

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A container on the Nanuq holds Christmas garland-like skimmer brushes that are meant to sop up oil. (Jennifer A. Dlouhy / The Houston Chronicle)

A container on the Nanuq holds Christmas garland-like skimmer brushes that are meant to sop up oil. (Jennifer A. Dlouhy / The Houston Chronicle)

Photo: The Houston Chronicle

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The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

The drillship Noble Discoverer, boring a well in the Chukchi Sea north of Alaska in 2012. (Photo: Jennifer A. Dlouhy / The Houston Chronicle)

Photo: The Houston Chronicle

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Pipes carry steam, produced gas, emulsions and other material between wells and a steam-generation facility at the Surmont oil sands project Conoco Phillips operates in Alberta, Canada. Conoco Phillips' partner on the project is Total E&P Canada. Surmont is located about 40 miles southeast of Fort McMurray, Alberta, in the Athabasca oil sands region. At Surmont, Conoco Phillips extracts bitumen from the oil sands using an in situ technique known as steam-assisted gravity drainage. (Jennifer A. Dlouhy /Hearst Newspapers / The Houston Chronicle ) less

Pipes carry steam, produced gas, emulsions and other material between wells and a steam-generation facility at the Surmont oil sands project Conoco Phillips operates in Alberta, Canada. Conoco Phillips' ... more